EUR/USD: With no direction as holidays mode remains on the table

The single European currency remains near the 1,04 level in an extremely narrow trading range as investors avoid betting due to the extended holidays between Christmas and New Year.

For almost 5 consecutive days the range of fluctuation has been limited to only 50 to 60 basis points and it would be a big surprise if something different happens in the next two days.

The European currency, apart from some signs of limited reactions which have helped it to remain above its recent lows of 1.0330, may it's difficult to show anything better at the moment.

The main causes that have weighed on the European currency over the last three months remain broadly on the table.

Geopolitical risks, the interest rate gap between the dollar and the European currency, political uncertainty and concerns about the European economy remain high on investors' agendas and currently constitute the main challenge in the European currency's effort to develop upward momentum.

These questions are expected to largely determine the course of the exchange rate in 2025.

The latest Fed meeting reinforced bets that the prospects for interest rate cuts in 2025 will be more limited, which kept the US dollar in the spotlight.

On the other hand, many believe that the exchange rate is at quite low levels and values much ​​below 1/1 would not be desirable from the European Central Bank's perspective, which strengthens the chances in the scenario the exchange rate range will move between levels 1 - 1,15  in 2025.

Today's agenda is relatively light and no major surprises are expected, with pending home sales in US being the only stands out.

In an environment without big bets and without any direction at the moment, a wait-and-see attitude is my only thought, but I remain close to the idea of ​​re-buying the European currency on some new sharp dip, possibly below the recent lows.